Accounting for Worker Wellbeing

I am one of eight finalists in the Maryland Institute College of Art (MICA) UP/Start business pitch competition. The eight of us will be competing for a share of $100k in start up capital this upcoming Tuesday, April 14, 2020. As part of the official requirements of the competition, the seven other finalists and I had to submit our financial projections via a template spreadsheet. The template included standard financials such as a 3 year proforma balance sheet and income statement.

But here’s the thing: I truly, deeply do not care about making a profit. I care about being able to create an accessible workplace that prioritizes worker wellbeing. I care about making enough money to pay employees well. And that’s it.

I found that standard financial modeling didn’t provide me with the necessary information I needed to plan for providing an accessible workplace. Instead, I had to create my own way of doing financial projections.

In the standard approach to accounting, salaries are counted as a cost. Investors want to see a business minimizing costs and maximizing revenues to create as much profit as possible. This system of accounting is inherently set up to exploit worker labor. Each additional hour an employee works for free (each hour outside of a standard 40 hour work week) is a cut cost. Each additional responsibility or project that a worker takes on that’s outside of their job description is a maximized revenue. This system is the same of both for-profit and not-for-profit organizations. It’s just that the revenue is grant funding rather than goods sold in the case of not-for-profits.

In this system, organizations and businesses take on whatever work load they can to maximize their revenue. This might look like accepting orders for products or bringing on another big client. In the case of not-for-profit organizations, it looks like taking on grants that will increase their scale (ie. the number of clients served and/or the number of services offered). Then, the organization or business asks its staff to step up and do the work to pull off that level of revenue/scale. Sometimes they might hire more people to pull off the work load, but, especially in the not-for-profit realm, they often just end up asking more and more of existing staff. This is the predictable — no, designed — outcome of a financial model in which costs and revenues are accounted as independent variables, with worker wellbeing factored no where into the accounting.

A work environment based on this standard system of accounting is not accessible to me. My disabilities limit my stamina for work. I simply cannot be a never ending well of productivity. And beyond my personal abilities, I believe that no one should be subjected to this type of exploitation. I believe that workers should have control over the amount of work they have to take on and that they should directly benefit if they ever take on additional work. I plan to employ a couple of different strategies in my business to try to minimize worker exploitation:

I’m still trying to work out the details of how to pull off #2. I’d like to find a values aligned accountant I can partner with who knows the “business as usual” accounting rules and can guide me into being more intentional about which rules I want to break and which rules I want to keep. For now, however, this is the accounting approach I took when I created my own financial projections — the ones that didn’t fit into the template I was given for the business competition:

The key departure from traditional accounting in this approach is that I started first with my team’s salary. All other calculations — including product pricing and sales projections — flow from the team’s salary. Additionally, since product pricing is based on a combination of the worker hours required to make the product and the percentage of overhead costs, theoretically, the calculation of number of products needed to hit salary targets will never exceed worker capacity.

In typical business accounting, however, costs are added together first, then product pricing is set by market demand, and sales targets are set according to however much profit can be maximized within given demand. Worker capacity — and thus worker wellbeing — is not a part of the calculation at all. If the sales targets are totally misaligned with what it’s possible for workers to deliver, then too bad for them. They better step up or step out.

We will see how this alternative accounting experiment turns out. If you are a values aligned accountant interested in exploring financial models that prioritize worker wellbeing with me, please reach out!

Related posts:

Latin America is the most urbanized region of the world today, with over 80% of the population concentrated in cities. Many of these cities are characterized by contrasts, with the wealthy living in…

Mantendo a alta performance tendo a contratação como uma opção e não como regra.

Over the past couple of months, the COVID-19 pandemic’s severity has rapidly escalated. Basically all stores and activities which are deemed as “non-essential” have been shut down, virtually leaving…